Carbon pricing is the main reason behind falling coal generation.
That’s according to Grant Wilson, Energy 2050 Teaching and Research Fellow at the University of Sheffield, who told ELN the government has seen the “entirely intended consequences” of putting the framework into place.
Carbon pricing is a method of reducing emissions that contribute to global warming by charging money for every tonne of Carbon Dioxide that is emitted. It largely affects fossil fuel energy producers.
Dr Wilson said: “The biggest factor in the fall of coal last year is the UK’s carbon price floor, which has tipped the market back towards natural gas generation. It has had a very swift and powerful effect but that’s not to say its the only underlying issue.
“The level of the change from coal to gas has taken many by surprise. Recent trends and policy announcements suggested a reducing role for unabated coal generation in Great Britain but it has really fallen away. There have been calls to remove or reduce the level of the Carbon Price floor, however, the generation mix in 2016 suggests that its current level is having a significant impact.
“Reducing the Carbon Price Floor would make coal generation more competitive and if this tips the balance back from natural gas to coal once again, then one would expect the market to take advantage of this. Therefore, as a policy lever, the level of the Carbon Price Floor seems to be an extremely powerful and swift mechanism to change the generation mix in the short-term.”
He said ongoing market fluctuations between the price of coal versus natural gas, as well as the EU’s Industrial Emissions Directive to limit plant emissions would have also played a part in the reduction.
According to his report on the subject, in 2016, just 9.3% of energy was generated from coal, down from around 40% in 2012 – the lowest share ever seen in the history of the UK power system.
The fall saw UK energy emissions 25% lower than the year before, meaning each Briton effectively produced 400kg less Carbon Dioxide without having to change their behaviour.